After months of inconsistent and negative reports that it was slipping further into financial trouble, Globalstar L.P. released a statement clarifying its future funding requirements.
Globalstar previously stated that, without giving effect to any revenue and assuming that a $250 million bank credit is allowed to expire at the end of June, the company would need a maximum of $160 million by the end of the year.
Among other things, Globalstar Chairman and Chief Executive Officer Bernard L. Schwartz said: “We have previously reported that Globalstar has sufficient funds on hand to continue the deployment of the Globalstar system and that we will most probably require additional funding in the September/October time frame. At that time we expect to be in a more favorable position due to stronger evidence of deployment progress.”
Schwartz said the company is confident it can raise the funding and that its supporting partners are aware of the funding requirements and have agreed to support the project to its successful conclusion.
“Reports that requests for additional funding have been made and rejected are inaccurate,” Schwartz said.
Shortly following that statement’s release, aviation electronics provider In-Flight Network L.L.C. announced it plans to provide low-cost broadband Internet and e-mail services to commercial airline fleets through a long-term strategic development partnership with Globalstar and a development agreement with Qualcomm Inc.
The agreements call for the trio to jointly develop a system that will provide broadband Internet access as well as e-mail, paging and Voice-over-Internet Protocol applications to passengers aboard aircraft in flight. Broadband Internet data and entertainment will be transmitted directly to aircraft via geostationary satellites with the return link carried over Globalstar’s satellite network.
Globalstar’s senior director of communications, Mac Jeffery, said IFN approached Globalstar about six months ago to join the project.
“We hadn’t considered it before but when we looked at it, we saw the CDMA (Code Division Multiple Access) technology is so flexible it allows us to tailor the technology to a whole bunch of business needs very rapidly,” Jeffery said.
IFN saw the opportunity to use Globalstar’s constellation for something other than voice communication.
“The characteristics of Globalstar’s system lends itself to being ideally suited to doing this,” said Jeffrey Wales, chief executive officer of IFN. “In the past, people have thought of these satellite constellations as being suitable for voice traffic. The fact of the matter is, they are extremely useful to doing packet-switched data in the air.”
Globalstar’s Jeffery said the bulk of the satellite company’s business will continue to be in voice traffic, but it could “still play a very interesting role on the data side.”
Wales said the companies have yet to determine how a customer will be billed, including whose name will be on the bill the customer receives. Wales said he wants to deploy a service that customers can use without having to keep their eyes on the clock.
“In general, it’s our intention to make the service as comparable as possible to the experience that is available to them on the ground,” said Wales. This most likely will mean implementing flat-rate pricing plans, much like what America Online uses, he said.
In-Flight tested a prototype of the system over parts of North America earlier this month and a full-scale deployment is planned for late 2001. With Qualcomm-developed enhancements to its CDMA technology, the Globalstar data link initially will operate at speeds in excess of 200 kilobits per second, with speeds of 800 kbps expected in the future, IFN said.
